SHANGHAI: China stocks extended losses on Tuesday as the country grappled with surging COVID-19 cases, while investors took no comfort as the country also kept benchmark lending interest rates unchanged.

The blue-chip CSI 300 index closed down 1.7% and the Shanghai Composite index lost 1.1%.

Hong Kong’s Hang Seng index dropped 1.3%, while the Hang Seng China Enterprises index declined 2%.

Cities across China scrambled to build hospital beds and fever screening clinics on Tuesday, while the United States said that it hoped the country can address the current COVID-19 outbreak as the toll of the virus is a global concern due to the size of the Chinese economy.

“A reopening from COVID-19 control will finally push the economy to largely recover, but it still has an adverse impact on the economy in the short term,” Central China Securities analysts said in a note.

“The period might last two to three months, so the market will face near-term social and economic pressure.”

The World Bank cut its China growth outlook for this year and next, citing the impact of the abrupt loosening of strict COVID-19 containment measures and persistent property sector weakness.

Shares in consumer staples lost 3.2%, while tourism-related firms retreated 2.7%. Both indexes jumped in previous sessions on reopening bets.

China kept benchmark lending interest rates unchanged for the fourth consecutive month on Tuesday, matching the forecasts of most market watchers who nevertheless expect further monetary easing to prop up a slowing economy.

Chinese property developers Agile Group and CIFI Holdings slumped roughly 17% each, after they planed to raise money via share placement to repay existing debt.

China’s CSI 300 Real Estate index slumped 2.9% and Hong Kong’s Hang Seng Mainland Properties index plunged 6%.

Tech giants listed in Hong Kong lost 3.1%. The index lost more than 8% from a recent peak seen on Dec. 9.